Outlook For GBP USD, GBP AUD & GBP NZD Exchange Rates Depends Upon US Non-Farm Payrolls Data

June 7, 2013 - Written by Frank Davies

STORY LINK Outlook For GBP USD, GBP AUD & GBP NZD Exchange Rates Depends Upon US Non-Farm Payrolls Data

Today is Non-Farm Payrolls Friday and rarely has the closely-watched gauge of the level of job creation in the world’s premier economy been so eagerly anticipated. The reason behind this is primarily the content of the recent rhetoric emanating from the US’s central bank, the Federal Reserve, which noted in the minutes of its most recent monetary policy meeting that its controversial US$85bn per calendar month Quantitative Easing programme would remain in place until there were signs of a significant improvement in the American jobs market.

For some years now, the Fed’s three consecutive bouts of QE have suppressed the value of the Greenback in the global currency markets. The mere suggestion from America’s lender of last resort that it was contemplating trimming the amount of funding it is pumping into its asset purchase scheme caused the Buck to strengthen, taking the GBP USD exchange rate (currency : GBP USD) down to within a hair’s breadth of the psychologically key 1.5000 level.

However, US data releases over the past week have suggested that the situation in the real economy in the US is deteriorating. Wednesday’s ADP Employment Change data for last month showed at a below par 135,000, while yesterday afternoon’s weekly Initial Jobless Claims figure also came out at a lower than anticipated level, printing at 346,000.

Analysts are expecting this afternoon’s NFP figure to show that a relatively healthy 168,000 new jobs were generated in the States last month, an increase on the 165,000 positions which were created during April. A showing of below this level would make a near-term withdrawal of QE from the Fed an increasingly remote possibility, triggering further selling pressure on the Greenback and possibly sending the GBP USD exchange rate up towards the 1.6000 threshold.

Conversely, a print of 200,000+ would cause renewed speculation regarding a near-term tapering of QE3 by the Fed, an outcome which would send Cable back down towards the 1.5000 level once more. In such an event, the already pressurised Australian and New Zealand Dollars would be likely to give up further ground against Sterling, sending GBP AUD and GBP NZD up towards 1.7000 and 2.0000 respectively.

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